Monday, November 02, 2015

The point of the
FCC's Technology Transitions
proceeding supposedly is to speed up migrations from legacy narrowband services
to Internet Protocol-based broadband services. But the Commission's proposed Tech Transitions regulations miss that
point completely. If adopted, they would erect new roadblocks to broadband
deployment. Truly, the Commission needs to transition itself away from such a
counterproductive proposal.

The Commission is taking public comments
on proposed rules that
would make it harder for transitioning providers to discontinue operating
copper-based legacy voice networks. In essence, the Commission plans to put the
burden on providers to justify discontinuation of legacy networks and replacing
them with services using new advanced technologies.

If the
Commission really wants to streamline and speed up tech transitions, it should
settle on a simpler approach that is keyed to existing market realities. The
Commission should adopt deregulatory presumptions in the Tech Transitions proceeding. Given the widespread consumer adoption
of VoIP and wireless services, the Commission should presume that VoIP and
wireless are adequate substitutes for legacy networks. Upon filing an
application, the Commission should allow voice providers to discontinue old
copper-based voice services unless there is clear and convincing evidence that
no adequate substitute is available in a given area.

As indicated, there
are at least three serious problems with the Commission's proposed Tech Transitions regulations.

First, the Commission's proposed rules will
slow broadband deployments and upgrades. If adopted, its restrictive procedural hurdles on discontinuing
copper-based services will impose unnecessary costs and delays on tech
transitions. The Commission already has a process for discontinuing voice
services under Section 214. When voice providers request discontinuation of
services, the Commission weighs five factors: (1) financial impact on the
provider of continuing to offer services; (2) need for the service in general;
(3) need for the particular facilities in question; (4) existence,
availability, and adequacy of alternatives; and (5) increased charges for
alternative services. Section 214 applications are nearly always granted as a
routine matter.

The Commission
now proposes to bog down the existing Section 214 process. Under the
Commission's proposal, providers seeking to discontinue retail voice services
and replace them with services "based on a newer technology" must show
that its new service – or services available from other providers – satisfy
additional requirements. The proposed requirements involve: (1) network
capacity and reliability; (2) service quality; (3) device and service
interoperability; (4) service for individuals with disabilities; (5) PSAP and
9-1-1 service; (6) cybersecurity; (7) service functionality; and (8) coverage. These
requirement are directed specifically to incumbent local exchange carriers
(ILECs).

Of course, if
anyone objects to the transitioning provider’s application, the Commission's
proposal states: "[T]he carrier would be
required to submit information demonstrating the degree to which it meets or
does not meet each factor." In other words, the Commission proposes putting
the burden on providers transitioning to all-IP network services.

Assembling detailed information and organizing
the paperwork involved will doubtless drag out the transition to all-IP
networks. It will certainly impose regulatory compliance costs on providers,
tying up resources better spent deploying broadband networks. Moreover, the
Commission's proposal will result in unnecessary duplication. Voice providers
will continue to be required to maintain two separate networks to perform the
same end-user services. And increasingly expensive replacement parts are needed
to maintain legacy network operations. Here also, pouring financial resources
into outdated networks to satisfy regulatory requirements means reducing
investment in next-generation services.

Second, competitive marketplace
conditions make burdensome new regulatory requirements on tech transitions unnecessary. Consumers today have real choices among
service providers, undermining the need for stringent regulations. Earlier in
the Tech Transitions proceeding, the
Commission expressly observed that three-fourths of voice subscribers use
Voice-over-the-Internet Protocol (VoIP) and wireless. Continuing steep declines
in switched access lines have been widely recognized. According to the Local
Telephone Competition Report
(2014), “[i]n December 2013, there were 85 million end-user switched access
lines in service, 48 million interconnected VoIP subscriptions, and 311 million
mobile subscriptions.” Between 2010 and 2013, VoIP subscriptions increased at a
compound annual growth rate of 15% while switched access lines declined 10%
annually. Cable operators are now nationwide providers of VoIP services. And over 45% of households rely exclusively on
wireless for voice
services.

These trends in
technological migration and consumer adoption presumably are a critical part of
the Tech Transitions proceeding's
reason for being. They also render the Commission's proposal for Tech Transitions regulations needless.
If imposed, the result would be burdensome requirements on a single ILEC, when
consumers would likely have access to competing wireless and cable providers of
voice services.

Third, there is a serious rule of law
problem with the Commission's proposed rules. The Commission doesn't appear to have the authority to
impose them. The purpose of Section 214 is to make sure communities have access
to voice services. Section 214 is not a source of power for regulating the
details of broadband service deployments or upgrades. But the Commission's
proposed requirements for replacing legacy voice services with "a newer
technology" delve into technical capabilities of all-IP networks. That
goes far beyond basic Section 214 requirements for discontinuing voice
services.

Instead of
imposing regulations that will slow tech transitions, the Commission should
take a simpler approach that is tied to the realities of today’s marketplace. There
is widespread consumer adoption of VoIP and wireless services. There is also
competition to ILECs from wireless and cable VoIP providers, offering real
choices to consumers. The Commission should therefore adopt a deregulatory
presumption to govern the Tech Transitions
process. In particular, it should presume that VoIP and wireless are adequate
substitutes for old copper networks. Upon filing and application, the
Commission should allow voice providers to discontinue copper-based voice
services within a short timeframe absent actual compelling evidence that no
adequate substitute is available in a given area.

A pro-market approach in the Tech Transitions proceeding based on deregulatory presumptions will reflect existing
competitive choices. It will actually facilitate such deployment of all-IP
networks rather than impede them. And, finally, it will conform to rule of law
norms by not over-stretching the common understanding of the Commission's
authority under the Communications Act.